Fourth-quarter retail sales were higher than expected, as households made the most of cheap credit, declines in fuel costs and fierce competition and low prices offered by retailers.
Rising consumer retail spending, the heated housing market and upward inflationary pressures lessen the likelihood of the Reserve Bank moving off the interest-driving official cash rate of 3.5%.
For the first time, the sales for the quarter ended December, hit $20 billion, underpinned by a surge in car sales, according to Statistics New Zealand (SNZ) data released yesterday.
The ASB's rural economist, Nathan Penny, said household spending was ''accelerating on several fronts'', with a particular impetus from plunging petrol prices, noting that retail prices had declined, which reflected pressure on retailers' profit margins.
Seasonably adjusted sales rose 1.7%, from the previous quarter, while actual sales climbed 5.9% on a year ago by volume, and rose 4.7% to $20.9 billion in value.
Westpac's senior economist, Felix Delbruck said, while stronger than expected, the result was very much in line with a bigger picture theme of strong momentum in New Zealand's domestic economy, against the backdrop of very low inflation.
''The combination will encourage the Reserve Bank to maintain its on-hold stance for the official cash rate,'' Mr Delbruck said.
The value of sales in the North Island rose 1% while sales in the South Island rose 1.6%.
Retail sales
12 of the 15 retail industries had higher sales volumes.
• Car and parts retailing, up 3.4%
• Food and beverage services, up 3%
• Supermarket and grocery stores, down 1.2%.
• Core retail sales (ex cars) up 1.5%.
SOURCE:SNZ
